Judge questions AT&T merger: McCaw acquisition raises fears of monopoly

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The Independent Online
ANOTHER big US telecommunications merger, AT&T's dollars 12.6bn ( pounds 8.7bn) acquisition of McCaw Cellular - has run into problems, this time over concerns of a monopoly.

Judge Harold Greene, the US district court justice who issued the landmark 1982 ruling that broke AT&T's telephone monopoly, ruled that parts of the merger appear to undo some of his original order.

In several large cellular telephone markets in the US, the takeover would in effect make AT&T a partner with BellSouth - one of the regional 'Baby Bells' it was forced to divest after the ruling - which co- owns franchises with McCaw.

But the judge stopped short of vetoing the merger, inviting AT&T to resubmit its application with either a new justification or a plan to sell the franchises in question in Los Angeles, San Diego and Houston.

AT&T had argued that ownership of the properties should not be governed by the 1982 ruling because BellSouth had acquired its stake in them after the break-up.

Telecoms analysts say the ruling is likely to delay the merger - scheduled to be completed this summer - rather than scuttle it.

Both AT&T and McCaw argued yesterday that Judge Greene's decision amounted to a conditional approval of the merger, given the narrowness of his objections and the chance AT&T has to address them.

BellSouth, which objects to the merger, argued that if the deal is approved, it and the other Baby Bells should be allowed to compete with AT&T in providing long-distance cellular services. But the court rejected the argument.

Regulatory intervention has been blamed for the recent collapse of a number of important deals involving the Baby Bells, including Southwestern Bell's dollars 4.9bn partnership with Cox Cable in the US, and Bell Atlantic's dollars 33bn takeover of Tele- Communications Inc.